US Fed hikes rates: Aus shares to slip from highs

Market Reports

by Jessica Amir

The Australian share market is expected to retreat at the open, after Wall Street closed mixed when The Fed raised interest rates, noting GDP was tipped to strengthen.

Although the interest rate hike was largely expected, the Dow Jones rose about 46 points, hitting another fresh record close. The oil price however plunged after US gasoline stockpiles rose and that pulled down the Energy and Materials sectors on the S&P 500, which saw the index close lower. The tech heavy Nasdaq also closed in the red.

Meantime, the precious metal, Gold has also fallen after the Fed raised rates.

US economic news

The US Federal Reserve has raised interest rates by 0.25 per cent, raising its benchmark interest rate range to 1 per cent to 1.25 per cent, despite falling inflation. It comes as inflation actually fell to 1.7 per cent in May from 2.3 per cent in January.

It’s the second hike this year, despite the Federal Open Market Committee now believing inflation will fall well short of its 2 per cent target for the next 12 months.

The Fed expects GDP growth will strengthen to 2.2 per cent, while unemployment will further decline and more than expected. Because of that, it also announced it would unwind its US$4.5 trillion balance sheet.

Local economic news

The Australian unemployment rate for May is expected to remain on hold at 5.7 per cent seasonally adjusted, while the participation rate is also expected to hold. Despite that, the number of full time employed is tipped to rise in May, and 10,000 jobs are expected to be added last month.

Markets

Wall Street closed mixed on Wednesday: The Dow Jones Industrial Average gained 0.2 per cent to close at 21,375, the S&P 500 fell 0.1 per cent to close at 2,438 and the NASDAQ slid 0.4 per cent to close at 6,195.

European markets closed mixed as well: London’s FTSE lost 0.4 per cent, Paris fell 0.4 per cent and Frankfurt gained 0.3 per cent.

Asian markets closed mostly lower: Tokyo’s Nikkei fell 0.1 per cent, Hong Kong’s Hang Seng rose 0.1 per cent, and China’s Shanghai Composite fell 0.7 per cent.

And back home, the Australian share market closed higher on Wednesday: The S&P/ASX 200 Index closed 61 points higher or over 1 per cent higher to finish at 5,834. On the futures market the SPI is 32 points lower.

Company news

Northern Minerals Limited (ASX:NTU) has signed a $14 million funding agreement for its rare earths project in northern Western Australia. The rare earths developer will receive the $14 million funding for its Browns Range Pilot Plant Project, with an initial $6 million to be funded immediately. Lind Partners, through a managed entity provided the 30 month term funding through Convertible Securities. Shares in Northern Minerals Limited (ASX:NTU) last traded steady at 11.5 cents.

To ex-dividends

One company is going ex-dividend today: Fisher & Paykel (ASX:FPH) is paying 10.44 cents unfranked.

Currencies

The Australian Dollar at 7:30AM was buying 75.89 US cents, 59.53 Pence Sterling, 83.18 Yen and 67.67 Euro cents.

Commodities

Gold has fallen $6.10 to $US1,263 an ounce.
Silver has gained 11 cents to $US16.88 an ounce.
And Oil has tumbled $1.78 to $US44.89 a barrel.
 

Jessica Amir

Finance News Network
Jessica joined FNN in January 2017 after having worked in financial advising for seven years and in TV journalism for seven years, specialising in finance, equities and analysis. She has interviewed former Prime Ministers of Australia, Tony Abbott, Julia Gillard and Kevin Rudd and ex Treasurer Jo Hockey. Jessica has worked as a journalist with Sky News Business, ABC 1, ABC's The Business, ABC24 and has also been a regional Channel 7 and 9 TV reporter with Prime7 and Win News.